The correct answer is B. B is the correct answer because late payment interest is a personalliability of the owner of the business rather than the business itself, and isdisallowable. The legal fees in respect of the new shop are capital expenditure andalso disallowed. The write off of trade debts and subscribing to a trade related magazineare both allowable for tax purposes.

The correct answer is C. Expenditure which would be allowable once the business hascommenced, is allowable if incurred in the 7 years before tradingcommences. The rent and advertising are allowable but the suit is aprivate expense.

Capital allowances: Plantand machinery Chapter learning objectives

Upon completion of this chapter you will be able to: • define plant and machinery for capital allowance purposes• compute the annual investment allowance (AIA) available forcertain types of expenditure• compute first year allowances (FYAs) available• compute writing down allowances (WDAs) for an accountingperiod• compute balancing allowances and balancing charges • compute capital allowances for motor cars• recognise the impact of private use of an asset on capitalallowances• explain the treatment of assets included in the special rate pool• recognise when the small pool WDA is available• explain the treatment of short life assets.